EN | The Growth of Staking in LatAm – The Steps for Institutional Adoption | MERGE São Paulo

Uh so I'm going to be joined here by Stefano Batista, good friend. He's the head of LatAm at Figment, uh which is the world's largest institutional staking services provider. So we're going to be learning a bit more uh from Stefan about staking as a service in Latin America. So uh let's have a seat.

So Yeah, so Stefano, uh great to have you here. You uh how was the trek up from Faria Lima? Oh. I made it just in time.

Yeah, Stefano uh I mean, it's a beautiful place. I I glad Merge organize chose here. But the ride from Faria Lima to the airport to here is is a journey. Yeah, it's a bit of a trek, right? So well, tell us a bit more about uh Figment and then uh your role specifically with Figment.

Absolutely. So Figment is the largest staking validator in the space. Uh we stake about 18 billion dollars of assets with 5% to 8% of all Ethereum being validated through Figment. Uh we stabilize um the the operations here in Brazil a year now, since March last year. We've been growing up really fast.

Most of the banks, neo banks, uh marketplaces, if they offer a staking solution, uh this is Figment. Behind that it's Figment. So my role here is business development. So I'm responsible for uh the whole LatAm. We have uh Head of LatAm in Buenos Aires, so we have operations in Brazil, Argentina, and expanding out to Mexico and Colombia.

Uh Figment has offices in New York, Singapore, London. We are global operation, but we're super excited about LatAm. New regulations, uh new players coming to the game, not just trade fi, not just crypto native, but also trade fi. So we're super excited about that. Amazing.

Amazing. And so, the staking as a service is an interesting kind of addition to some of the product offerings we've been talking about today because staking, as we know, provides the opportunity for a passive yield generation mechanism, right? So, you can do more with crypto assets than just trade them or you can buy them or sell them, but you can stake them to earn a passive income. And maybe talk a bit about how how does that kind of fit into the portfolio of either an asset manager or a bank or like or potentially even exchange-traded product that's that's that's that's operating with crypto. Like, why is this such an important addition to that that tool toolkit?

That's a great question. Staking is a essential infrastructure for many of the proof-of-stake networks. So, you lock your assets and your assets are used to to validate transactions on chain. That generates rewards to you. So, this is basically what, as we understood, the Fed funds in a portfolio.

So, staking is you can say riskless because the risk of staking is slashing, and there are some networks that not don't even have slashing. Figment, for example, never had a slashing event in its whole history. So, slashing is when you don't comply with the regulations of Ethereum and you lose part of your Ethereum. So, professional validators normally don't experience slashing. But the fact that you can earn five in Solana, for example, 8% a year without basically risk attracts many institutional investors from marketplaces that can use users' deposits.

And today, the regulation of Brazil authorizes you to do that to use to use users' deposits and generate stake on the top of it. or you as an asset manager can start staking and have part of your performance linked to riskless structure, which in terms of risk management looks really good when you're running some type of Markovitz or any type of VAR risk. There's a bunch of metrics where staking fits right in. So, has been really interesting those conversations. Our most our use case that's most common here in LatAm is marketplaces or neo banks using their users' deposits to stake, give part to them, and take part as as business income.

And so that the staking ecosystem has evolved a lot in in really even just four or five years. I mean, some of I don't know if we have any like, you know, OGs, crypto folks in the house, but if any of you tried, you know, running Ethereum staking nodes in your garage or whatever like I did back in the day, um like things have professionalized a lot from those days. In a very short period of time, like four This isn't This isn't like an amateur operation. Like So, I think you know, there's a connotation around staking that this is kind of uh this is maybe not like institutional caliber, right? But I think what you guys have built and other similar firms that are offering these professional staking as a services uh opera operations have really been able to provide this um really like this like assurance that, okay, you can stake with us.

You can You can implement this into your into your stack, into your portfolio, and you're not going to be, you know, there's no compliance tripwires you're going to be triggering. There's not going to be any regulatory, you know, skeletons in the closet you have to deal with. So, maybe talk a bit about how um this just staking as a service in general has become this kind of a mainstream option for institutions generally, and how it's evolved from those those the early, you know, running a node in your garage type of days, right? That's a great question as well. So, that's something that our CEO always tells that it's not hard to do staking.

Everyone can Not everyone, but there's a lot of intelligent folks here and out there that can sit down and create a Ethereum node and start to validate transactions on Ethereum. This is blockchain. This is open for everybody. What really set us apart in that institutional offering, it's having the capacity to do that for more than 50 proof-of-stake networks with different rules, with different uh structures, with different types of connectivities, and start to be in the top of this every time. So, every time there's a change in Solana, it's much more easier for us to do those change than our direct clients to start and study the change and do the change themselves.

I can give you an example. So, uh Solana has what is called priority fees. So, everyone that is staking in Solana pays to the validator a little bit of their rewards as a priority fees. So, the block can be in front of other blocks when you are validating. So, that's a very interesting source of rewards that just the professional uh validators are capturing, and in Figment case, distributing to the client.

So, that's a change that was proposed to the Solana network last year, and we don't see that coming on chain until later this year. So, some professional offerings can do that ahead of time. So, this is one of the many examples that how can we set up a compliance, meaning the the way to set validators, the correct way to have the the rewards flowing to the users, and at the same time maximize every change and every update that you have in any protocol that we cover. And then, talk a bit more about um when we're when you're looking at the Latin America region here, and if there are banks or institutions that are like, "Well, I want to I want to get involved with this. I want to incorporate this into my product suite, etc."

What does that onboarding roadmap look like for bringing this type of offering, uh being able to either offer it to their customers, or being able to being able to just use that with their own proprietary funds? Like, what does that whole onboarding process look like? And maybe speak a little bit more to just the general level of adoption that you've seen since you've been you've been representing Figment here for about a year or so. Like, what's been kind of the reception uh that you've you've encountered in in your conversations with all the folks on Faria Lima and elsewhere? Absolutely.

So, when we first started in the region like back in 2024, uh was not even me, it was other representatives. The focus on was on crypto native firms. So, companies that their users are readily have a previous knowledge what staking is, what crypto is, what blockchain is. So, this changes with regulation. So, mainly in Brazil, and now we are seeing some stuff in Argentina, uh the changes in the regulation made the tradefi companies and tradefi banks start offering digital assets products.

Everybody is seeing that with like merge now in Brazil, last year was in in Argentina. So, this professional move brings a whole new wave of customers that don't understand what blockchain is, don't understand sometimes what staking is. So, the roadmap for us and what has set the staking business apart in LATAM for the past year was explaining this complex sometimes complex concept to their final user. So, they are they feel safe enough to deposit their their tokens into a custody that's connected to Figment and then he can start receiving rewards and then he understand, "Oh, this is like a safe deposit. Okay, I can work with that.

What is my risk here? Oh, I don't have much risk in in this operation. That's great." So, you start to show to the final user that that's a new technology that they can use and apply their understanding of other financial products into it. And that really changes the business for us in the past year.

Everybody that is here from Latin America knows that saving in dollars has been something that we always do and also mainly in Brazil we do have a lot of people that are focused on fixed income as their main investment. So, when you explain to them, "Hey, you can have Solana and Solana is going to pay you 7 to 8% a year and on top of that you can hedge with futures your Solana rewards. So, you get 6 to 7% a year without credit risk if you trust in Solana blockchain." There's there's a game changer for many of our clients. Yeah, absolutely.

Well, Stefano, thanks so much for your time here today and maybe a quick plug you guys are hosting a side event tomorrow at the the Tinga Hotel. So, um definitely come check that out tomorrow tomorrow late afternoon after the merge conference. Absolutely. So, uh to like commemorate one year of us being here, tomorrow we are hosting an event at Palacio Tangara, which is a nice hotel here in São Paulo. It's 20 minutes from the Merge main conference.

So, step by, you are going to have the Central Bank of Brazil talking about the staking regulation in Brazil. We're going to have our best customers there talking about how to onboard the next 1 billion users of staking, new sources of rewards. There are a bunch of new networks coming into the game that can pay you rewards uh by running validators. So, should be a really great discussion. Aaron's going to be there hosting our main event.

So, uh come by. Uh it's on the Merge side events list. We're happy to have you there. Amazing. Well, thanks again, Stefano.

Thanks everyone for being here. And then now

Thank you. we'll wrap up here and then we'll call up our last uh last panel. So.